The City of Stockton emerged from bankruptcy protection this week after more than two years of fiscal planning and cost cutting supported by Management Partners.
“We emerge from bankruptcy a renewed city, perhaps better prepared for our future than any other city in the state,” Stockton City Manager Kurt Wilson said, “with a new value system, a thorough understanding of our operations and finances and the tools to maintain solvency and adjust to economic conditions for decades into the future.”
When Stockton, with 300,000 residents, declared bankruptcy in June 2012, it was the largest American city ever to do so. Although Detroit replaced it a year later, Stockton was able to resolve its bankruptcy without appointing an emergency manager, as Detroit did.
“Stockton’s City Council made all those difficult decisions,” said Andrew Belknap, Management Partners’ regional vice president, who worked closely with Stockton officials and Management Partners colleagues to help create the city’s plan of adjustment. “It shows that democracy can work and the council-manager form of government is strong enough to do the hardest thing a city can do, which is to go into and come out of bankruptcy.”
When it entered bankruptcy, Stockton was $700 million in debt, which U.S. Bankruptcy Judge Christopher Klein blamed on the housing downturn, overly generous pay packages for city workers and debt for new projects. Management Partners built a fiscal model for the city, developed key components of the plan of adjustment, created an implementation plan with milestones, and managed other aspects of the bankruptcy.
The firm also worked with the City of Vallejo on its bankruptcy and is currently helping San Bernardino officials manage that city’s bankruptcy.